The United States has more than 90,000 local governments. Theory suggests that the existence of numerous local governments can promote citizen welfare and better fiscal performance in the local public sector. Local government fragmentation creates a marketplace where residents and businesses can shop for the jurisdiction that provides the tax and service package that they prefer. As local governments compete for high-income households and firms, they need to operate more efficiently, leading to greater fiscal discipline in the local public sector as evidenced by smaller public budgets, revenues, or debt.

However, beyond its fiscal disciplinary effects, does the fragmentation of local governments lead to a special class of governance problems, specifically spatial economic and racial segregation? How does segregation influence local revenue and budget choices? How do these choices, in turn, affect equity in the distribution of revenue burdens and access to public services among different groups of citizens?

Jimenez, Benedict S. (2016) Externalities in the fragmented metropolis: Local institutional choices and the efficiency-equity tradeoff. American Review of Public Administration. 46(3): 314-36

Jimenez, Benedict S. (2015) The fiscal performance of multi-level local governments. Public Finance Review. 43(5): 606-35

Jimenez, Benedict S. (2014) Separate, unequal and ignored?: Inter-jurisdictional competition and the budgetary choices of poor and affluent municipalities. Public Administration Review 74(2): 246-57.

Hendrick, Rebecca, Benedict S. Jimenez, and Kamna Lal. (2011) Does local government fragmentation affect local spending? Urban Affairs Review 47(4): 467-510

Jimenez, Benedict S. and Rebecca Hendrick. (2010) Is government consolidation the answer? State and Local Government Review 42(3): 258-270.